Greece debates referendum amid fears of run on banks

Greece debates referendum amid fears of run on banks
PHOTO: Reuters

NIKOLOPOULOU - Greek lawmakers debated a surprise bailout referendum Saturday amid signs of customers queueing to withdraw money from banks as fears of a default intensified.

Prime Minister Alexis Tsipras, who delivered his shock referendum call in a televised address early Saturday, will address parliament later, with a vote on whether to go ahead with the plebiscite scheduled for midnight.

The bombshell shocked the nation, with people reportedly rushing to withdraw money in fear of capital controls and more financial chaos after nearly six years of crisis and deep recession.

Tsipras' radical leftist Syriza party urged Greeks to vote against the deal, arguing it would worsen austerity in a nation already buckling under economic hardship.

Greece will now hold a referendum on July 5 on the outcome of negotiations with its international creditors taking place in Brussels on Saturday.

In Greece's second city, Thessaloniki, some banks have run out of money, according to an AFP reporter, while a National bank branch had a queue of 50 people.

"I have a shop. I came to the bank to withdraw as much money as I can in order to cover the needs of my shop for next week," 42-year-old Maria Kalpakidou told AFP.

"If we don't have an agreement by July 4, the Greek banking system will crash." Private employee Nikos, 52, added: "There is a lot of fear of what may happen.

"In the last election I voted for Syriza. But we voted for them to decide, not to transfer responsibility to us, to the Greek people." Another worried bank customer, Sofia Makridou, told AFP that there is "great uncertainty and insecurity for what may happen", adding it is "rational that there is a bit of a panic".

Demand at petrol stations was also said to be "heightened" but there were no fuel shortage problems, according to state news agency ANA.

At the Greek parliament, meanwhile, several sources told AFP that the two cash machines there had run dry.

In central Athens, small groups of people queued at cash machines as a precautionary measure, with between three and 10 people seen queueing at 10 different ATMs.

A Greek central bank source said it would do "whatever possible" to make sure that cash machines were stocked.

Greece on Friday rejected its international creditors' offer of a five-month, 12-billion-euro (S$18 billion) extension of its bailout programme, arguing that the reforms demanded of it were unacceptable.

In Brussels, eurozone ministers are gathering for critical talks, amid anxiety over a possible Greek default next Tuesday that could potentially spark its exit from the euro.

Syriza came to power in January on an anti-austerity platform and has spoken out vehemently against the bailouts negotiated by previous governments.

"We are calling the working people, the youth, the pensioners, the farmers, to turn down the ultimatums of the creditors," Syriza's political secretariat said in a statement Saturday.

'A loud no to austerity'

"We call the Greek people to say a loud 'No' to the heavy hand of austerity." A recent opinion poll showed that more than three-quarters of Greeks want to remain in the eurozone, while just 16 percent called for the return of its old drachma currency.

Tsipras had said earlier that the creditors' proposals were about the "humiliation of the Greek people" and would exacerbate social inequality.

Proposals included more labour market deregulation, pension cuts, further reductions in public sector wages, higher VAT on food, restaurants and tourism, and the elimination of tax breaks for far-flung Greek islands, he added.

Greek media expressed shock at the surprise referendum call.

Financial newspaper Naftemporiki described the Tsipras announcement as a "referendum bomb" that came as an "absolute surprise inside and outside the country".

"Referendum of bankrupt: Euro or drachma," read the front page headline of right-wing newspaper Eleftheros Typos.

Pro-government newspaper Avgi blasted previous governments for accepting painful austerity tied to the nation's previous two bailouts.

Leftist paper Efimerida ton Syntakton illustrated the story with a cartoon of Greece sat in an electric chair at the Eurogroup gathering.

"More austerity measures, it's not right. A lot of people are hungry," said Takis Bezaitis, 40, as he read newspaper front pages at a kiosk.

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